Interest Rate Update: What to Expect from the Federal Reserve Today ?
Interest Rate Update: What to Expect from the Federal Reserve Today ?
A Year at Record Highs
A Year at Record Highs
This has resulted in elevated levels of interest rates, on average, presiding at 5.25% to 5.50%. The aim was to reduce inflation, which had been impacting the economy badly. In terms of rate cuts, by July 2023, it was still unknown whether or not the Federal Reserve board would consider that move.
This has resulted in elevated levels of interest rates, on average, presiding at 5.25% to 5.50%. The aim was to reduce inflation, which had been impacting the economy badly. In terms of rate cuts, by July 2023, it was still unknown whether or not the Federal Reserve board would consider that move.
Today's Big Announcement
At 2:00 PM Eastern Time today, the Federal Reserve will announce its interest rates. Analysts believe that there won't be any changes in the benchmark interest rate. Nevertheless, this is an important announcement since it can also set base for future actions especially in relation to a possible decrease of rates during September.
At 2:00 PM Eastern Time today, the Federal Reserve will announce its interest rates. Analysts believe that there won't be any changes in the benchmark interest rate. Nevertheless, this is an important announcement since it can also set base for future actions especially in relation to a possible decrease of rates during September.
Jerome Powell's Press Conference
Jerome Powell's Press Conference
Eastern Time at 2:30 p.m. the Federal Reserve Chair, Jerome Powell, will be conducting a press conference. Chances of announcing a rate cut seem slim. However, analysts will be perusing Powell’s statements keenly looking for any small signals on prospective trends in interest rates and policies that might affect the economy.
Eastern Time at 2:30 p.m. the Federal Reserve Chair, Jerome Powell, will be conducting a press conference. Chances of announcing a rate cut seem slim. However, analysts will be perusing Powell’s statements keenly looking for any small signals on prospective trends in interest rates and policies that might affect the economy.
Inflation Trends and Fed Goals
In June, the annual inflation was at 3.0%, which is way below June 2022 when It reached 9.1%. However, this level is too high for the Central bank of the United States whose target is 2%. Lowering inflation further is what the Fed would like to achieve and this contributes to their careful approach to adjusting interest rates.
In June, the annual inflation was at 3.0%, which is way below June 2022 when It reached 9.1%. However, this level is too high for the Central bank of the United States whose target is 2%. Lowering inflation further is what the Fed would like to achieve and this contributes to their careful approach to adjusting interest rates.
Expert Predictions
Expert Predictions
Most economists predict that today's meeting won’t result in an immediate rate cut. However, they believe the Fed will provide subtle hints about future actions. Two more months of declining inflation could provide the Fed with the confidence needed to lower rates in September.
Most economists predict that today's meeting won’t result in an immediate rate cut. However, they believe the Fed will provide subtle hints about future actions. Two more months of declining inflation could provide the Fed with the confidence needed to lower rates in September.
The Power of Interest Rates
The Power of Interest Rates
The key weapon that the Federal Reserve has in its war against inflation are interest rates. By increasing the cost of borrowing, high rates decrease the amount people spend and therefore slow down any economic activity which could help keep a lid on price rises. This approach is vital to the Fed's attempts to stabilise the economy and keep inflation at bay.
The key weapon that the Federal Reserve has in its war against inflation are interest rates. By increasing the cost of borrowing, high rates decrease the amount people spend and therefore slow down any economic activity which could help keep a lid on price rises. This approach is vital to the Fed's attempts to stabilise the economy and keep inflation at bay.
Subtle Signals to Watch For
Subtle Signals to Watch For
Analysts like Ryan Sweet from Oxford Economics suggest that any hints from the Fed about future rate cuts will be subtle. Those looking for a clear signal today might be disappointed, but the groundwork for a potential rate cut in September is likely being laid during this meeting.
Analysts like Ryan Sweet from Oxford Economics suggest that any hints from the Fed about future rate cuts will be subtle. Those looking for a clear signal today might be disappointed, but the groundwork for a potential rate cut in September is likely being laid during this meeting.